Labor hauls Greens over the coals

The Gillard government is threatening to jettison negotiations with the Greens and key independents over a carbon price if it fails to secure compensation for the highest emitting coalmines and coal-fired generators.

As the deadline for the Multi-Party Climate Change Committee to reach an agreement on carbon approaches, assistance for coal companies and generators has become a make or break issue in the talks.

Resources Minister
Martin Ferguson
has told his state and territory counterparts that if the Greens remain opposed to compensation, the carbon tax is likely to “fall over".

As opinion polls showed further falls in Prime Minister
Julia Gillard
’s approval rating amid climate change arguments, miners’ union head Tony Maher said the government would “knock off" the carbon tax if the plan did not include help for the so-called “gassy" coalmines.

But doubts emerged over warnings that 18 mines would close earlier than anticipated under a carbon tax, leading to the loss of 4700 jobs and a cut of up to 37 per cent of employment in new mines.

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Climate Change Minister
Greg Combet
said yesterday the government had “demonstrated during the last term of Parliament in the context of the Carbon Price Reduction Scheme that the government believed it was justified to provide assistance to the most effected coalmines and I have made remarks over the last few days publicly about this issue".

Treasurer
Wayne Swan
has also publicly backed the coal industry.

Mr Maher, president of the Construction Forestry Mining and Energy Union, said yesterday it was extremely important that targeted assistance be provided for a handful of existing mines.

“This is a drop dead issue for the scheme," Mr Maher told The Australian Financial Review.

“If you create victims out of malice you won’t get community acceptance and there will be no scheme. It will be a scheme killer."

But investment analysts questioned the new modelling by ACIL-Tasman for the Australian Coal Association that predicted significant mine closures. The analysts said the modelling was based upon no government assistance being provided. They also predicted that given predicted high commodity prices, job losses would be offset by job creation as investment moved to other, low emissions mines.

The Grattan Institute said the report did not take into account the likelihood of offsetting rises in coal prices if there was a noticeable withdrawal of Australian production.

“The study is based on unreliable data, its findings are contrary to data published by coal producers themselves, the study ignores the dynamics between Australian production and global prices, and the study fails to mention that even if it is right, there is unlikely to be any net change in Australian unemployment," Grattan Institute chief executive John Daley said.

In question time, the Prime Minister admitted “there are going to be a few gaseous mines challenged" but insisted “there is also going to be a huge expansion in this industry that’s actually going to create jobs over time".

However, a new poll by Essential Media showed Ms Gillard’s approval rating down 7 percentage points to 34 per cent and her disapproval rating up 6 percentage points to 54. Opposition to a carbon price rose to 48 per cent.

As part of the Carbon Pollution Reduction Scheme in 2009, coalmines with a fugitive emissions intensity over 0.1 tonnes of carbon dioxide per tonne of coal produced were entitled to receive 60 per cent of the permits required. That assistance would result in the most gassy mines – 0.2tC02e/1t-coal – paying $2.08 a tonne of coal produced but $5.20 if there was no compensation. Recent contracts for coking coal included rates of up to $330 a tonne as a result of the Queensland floods and it is projected thermal coal prices will be around $120 a tonne this year.

In negotiations with coal companies this year the government has offered the same level of assistance as under the CPRS, worth around $1.5 billion, but the Australian Coal Association has called for fugitive emissions to be excluded from a carbon price scheme until other countries treated them in the same way.

Greens deputy leader
Christine Milne
said yesterday it was not appropriate for the government to be giving any assurances that coalmines and coal-fired generators would receive assistance under a ­carbon price.